I don't find Harvey's transformation to extreme, but the lead ups may be too subtle.
Harvey, as much as he is a crusader of justice, is equally concerned with Rachel, much like Anakin in Star Wars, and it is that dedication to his love that makes him prone to uncharacteristic acts in reaction to that love.
His scarring and Rachel's death showed him a Gotham that all his best efforts could not fix, and left him feeling his efforts were in vein, and that the only true justic is chance, so he leaves his life to chance, letting the coin determine what he will or won't do. His ultimate motive was to make the people who affected his destiny experience what he went through. He had a deep hatred for Gordon because of trying to explain on two occassions that he had corrupt officers in his unit and Gordon paying no mind to that. He felt had Gordon listened, none of what happend would have, and so the only thing he felt was right to be done was to make Gordon experience the sensation of pleading to a loved one as they're about to die.
The big flaw in the transition, which someone else pointed out a while ago, is a lack of establishing an unstable mental state for Harvey. The White Knight was pushed solely, with little suggestion of his dark side, and the few signs given may not be strong enough for everyone to pick up on, so when he goes from White Knight to evil, it's a dramatic transition.
